Italian justice system rules mean that the 76-year-old media billionaire would not have to serve any jail time until the appeals process has been exhausted, and a higher court may still overturn the ruling.
It came in the middle of a complex political impasse arising from an inconclusive election last week that left no party able to form a government on its own, although Berlusconi's centre-right formation emerged as the second strongest in parliament.
Berlusconi is in the middle of a series of trials, with separate cases over charges of tax fraud and paying for sex with an underage prostitute due to wind up this month.
He has denied any wrongdoing in the case and the verdict was immediately criticised by his lawyer Piero Longo, who has frequently criticised Milan judges over the long series of trials Berlusconi has faced over the years.
"I'm not surprised, given that it's Milan and it has to do with Berlusconi," he told reporters after the verdict.
"But I am concerned and shocked because I'm quite convinced that the charges against Berlusconi were weak and contradictory and even completely lacking."
Berlusconi's brother Paolo, publisher of the family-owned Il Giornale daily, was sentenced to two years and three months over the same case, which centred on confidential wiretap transcripts related to a bank takeover which appeared in the newspaper.
The court also awarded 80,000 euros in damages to Piero Fassino, who was head of the main centre-left party at the time of the incident and whose remarks were caught on the wiretap and published in the newspaper.
Fassino asserted that Il Giornale, a right-wing newspaper, published the transcripts shortly before the 2006 election to create the impression that Fassino had exercised improper pressure in the attempted takeover of Banca Nazionale del Lavoro by insurer Unipol in 2005.
Late on Wednesday, Italy's highest appeals court upheld a ruling clearing Berlusconi of tax fraud in connection with his Mediatrade broadcasting rights firm.
The decision cleared Berlusconi of accusations that Mediatrade, the broadcast rights unit of his Mediaset group, acquired film and television rights at inflated prices to evade 10 million euros in taxes in 2004.
His trial on charges of paying for sex with a juvenile prostitute is expected to wind up on March 18 while a separate trial over broadcast rights is expected to conclude on March 23.
Despite his relative success in the election, Berlusconi's prospects of a return to government have been held back by the refusal of centre-left leader Pier Luigi Bersani to accept a "grand coalition" with his longstanding rivals.